1 Lean Thinking MGMT 511

2 Lean Thinking A philosophy Principles Practices For the design, operation, management, control and continuous improvement of a production system.

3 Objectives of Lean Produce the … –Highest quality –At the lowest possible cost –Within a short cycle time

4 Lean Pioneered and developed by Toyota TPS – Toyota Production System Womack and Jones invented the name Lean 3 important principles –Minimize waste –Continuous improvement –Respect for workers

5 Lean Lean is a philosophy that recognizes waste as the primary driver of cycle time, cost, and quality and employs techniques to continually drive out waste in processes.

6 Waste is ‘anything other than the minimum amount of equipment, materials, parts, space, and worker’s time, which are absolutely essential to add value to the product.’ — Shoichiro Toyoda President, Toyota

7 Becoming lean is the process of eliminating waste with the goal of creating value. It is not just about waste, it is also about value. Lean

8 Contrast TraditionalLean Producer “push” Movement of materials High volume Inspection Expert-driven Decomposition Periodic adjustment Large lot sizes Statistical Quality Control Customer “pull” Flow of value Flexible response Prevention Knowledge-driven Integration Continuous improvement Lot size of 1 Quality at the source

9 Statistical Quality Control TraditionalLean Inspection is expensive Infer from samples to save costs Inspect quality into the product Why? Can’t anyone do it? Inference implies risk of errors. Why are defects acceptable? Build it into the product

10 Historical Context Selected elements of the TPS implemented over 3 decades –Pull –Kanban (card) system –Production leveling –Reduced set-up time –Kaizen (continuous improvement) –Poka-yoke (error proofing) –Adnon (visual display)

11 Example – Kanban 1950’s – First Kanban experiments 1960’s – Kanban introduced company-wide 1970’s – Kanban introduced to suppliers

12 5 Principles of Lean Customer value: precisely specify value by product and service Value stream: identify the stream for each product or service Flow: no interruption Pull: customer pulls value Pursue Perfection: don’t compete Source: Womak and Jones

13 Value Definition Define customer needs Opposite of waste Use as metric

14 Value Stream Analysis Value Stream Map Critically assess Value-Added at each step Eliminate or minimize Non-Value-Added activities.

15 Value Added Activities Product or service is transformed into a state required for the customer. Activities for which the customer is willing to pay. VA

16 Non-Value Added Activities Activities which consume resources but create no value in the eyes of the customer. Customer is not willing to pay for these. NVA

17 Non-Value Added but Needed (or Necessary) Activities Activities causing no value added, but… Which cannot be eliminated based on current state of technology or thinking. NVA-N

18 Flow Continuous flow through the value stream. Make each product, each day, in direct proportion to demand. Move from traditional batching to small lot (or 1 unit) flow. Stability through reliability, quality and standardized work

19 Pull Pull the product through the value stream Authorize production – customer demand drives the process Cap WIP Kanban – signaling for required parts as they are needed

20 Perfection Create a clear vision of perfection –Production ideals –Customer value Make waste visible and evident Problem solve

21 What is Waste Any activity that is not adding value in the creation process of the product or service. Non-value added Non-value added but necessary

22 7 Types of Waste Defects in outputs Overproduction: not needed Inventories: for consumption or processing Unnecessary Processing Unnecessary Movement of people Unnecessary Conveyance of output. Waiting – for information, people, equipment

23 The Hidden Factory Stockrooms Material movers and moving equipment Expeditors Scrap Rework Obsolescence

24 Commonly Used Tools 5 S The visual factory Kaizen Poka Yoke Total Productive Maintenance (TPM) Single minute exchange of die (SMED) Takt time

25 5 S Simplify or Sort (seiri) – needed vs. unneeded items Straighten or Set (seiton) – keep in correct place Scrub or Shine (seiso) – keep clean and tidy Stabilize or Standardize (seiketsu) – use standard methods Sustain or Self-Discipline (shitsuke) – do not fall back to old way of doing things

26 The Visual Factory Make problems visible Charts to show performance Visual production and schedule boards Kanban (visible card signal)

27 Kaizen Continuous Improvement Improvements may be small However, many small improvements over time add up to major improvement

28 Common Poka-Yoke Examples (from John Grout’s Poka-Yoke Web Page) “Mistake Proofing”

29 Total Productive Maintenance (TPM) Impact on waste - breakdowns, setups, reduced speed TPM – Identify ways to maximize equipment effectiveness

30 Single Minute Exchange of Dies (SMED) Original term now extended to all setup time reduction efforts Fast setup or change-over Allows flexible use of machines – smaller lot sizes, reduced inventory Cost reduction More effective use of machines

31 Takt Time The rhythm of flow through a value stream Available weekly, daily or shift time –Divided by… Anticipated average weekly, daily or shift demand

32 Factory Physics Increase the velocity of flow of material Increasing flow is accompanied by reduction in inventory As velocity increases, the cost of the hidden factory decreases

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35 Benefits of Lean Cost savings Revenue increases Investment savings Workforce improvements Uncovering problems

36 Transparency Masters to accompany Operations Management, 5E (Heizer & Render) 12S-13 © 1998 by Prentice Hall, Inc. A Simon & Schuster Company Upper Saddle River, N.J Push versus Pull Push system: material is pushed into downstream workstations regardless of whether resources are available Pull system: material is pulled to a workstation just as it is needed

37 5 Tools for Improving Flow Process observation sheet Process flow diagram (we have done) Physical process map Time Value Map Takt Time (we have discussed)

38 Transparency Masters to accompany Operations Management, 5E (Heizer & Render) 12S-8 © 1998 by Prentice Hall, Inc. A Simon & Schuster Company Upper Saddle River, N.J Management philosophy of continuous and forced problem solving Supplies and components are ‘pulled’ through system to arrive where they are needed when they are needed. What is Just-in-Time?

39 Transparency Masters to accompany Operations Management, 5E (Heizer & Render) 12S-9 © 1998 by Prentice Hall, Inc. A Simon & Schuster Company Upper Saddle River, N.J Attacks waste – Anything not adding value to the product Customer’s perspective Exposes problems and bottlenecks – Caused by variability Deviation from optimum Achieves streamlined production – By reducing inventory What Does Just-in-Time Do?

40 Transparency Masters to accompany Operations Management, 5E (Heizer & Render) 12S-32 © 1998 by Prentice Hall, Inc. A Simon & Schuster Company Upper Saddle River, N.J Traditional: inventory exists in case problems arise JIT objective: Eliminate inventory JIT requires – Small lot sizes – Low setup time – Containers for fixed number of parts JIT inventory: Minimum inventory to keep system running Inventory

41 Lean Continues from Just-in-time discussed in the text. Most recent approach to reducing waste and speeding the flow of product or service to the customer.

42 What Lean is Not A quick fix. Easy to do.